Protecting The Future Of Sealed Air:Protecting The Future Of Sealed Air:Financial Analysis and RecommendationsFinancial Analysis and Recommendations

Company BackgroundCompany Background• Market leadership• Technical accomplishment• Consistent 25% annual growth

“We intend to seek market leadership because market leadership optimizes profit, and foster technological leadership because it is the only long-term guarantee of market leadership.” CEO T.J. Dunphy

• Competition in the protective packaging market

• How to sell against uncoated bubbles.

– Enter uncoated bubble market

• US, Germany, England, France

– Continue exclusively in the coated bubble market

ChallengeChallenge

European Air Bubble MarketEuropean Air Bubble MarketPrice SensitiveViewed packaging supplies as “expendable commodities”

• England– Sansetsu market dominance– Estimated 50% loss of current market share to uncoated for Sealed Air

• France– Increasing use of uncoated over coated.

• 90% of new bubble applications uncoated• Germany

– Sansetsu market dominance – Loss share to uncoated by 20%-30% a year for Sealed Air

U.S. Air Bubble MarketU.S. Air Bubble Market

Quality over Price.

• Packaging supplies viewed as productive, cost-saving resource

• Growing protective packaging market

• Sealed Air dominance in U.S. air bubble market

S.W.O.T. AnalysisS.W.O.T. Analysis

-Brand name recognition

-Existing manufacturing operations

-High quality products

-Knowledgeable sales force

Strengths

-Strong competitors

-Difficult to differentiate

-Decreasing market shares for Sealed Air

Weaknesses

Opportunities

-Large market for uncoated bubbles

-Increase profit

-Cannibalization of coated products

-Weakening quality image

Threats

 Total Variable Cost (1) Price to Distributor (2) Sealed Air Dollar Margin (3) Ratio of TVC to Price (4)

SC-240 (3/16 in.) 32.47 56.3 23.83 73%

Uncoated 3/16 in. 19 32.87 13.87 73%

England Uncoated 19 28.15 9.15 73%

France Uncoated 19 33.78 14.78 73%

Germany Uncoated 19 36.6 17.6 73%

ST-240 (5/16 in.) 38.12 65.35 27.23 71%

Uncoated 5/16 in. 20 34.2 14.2 71%

England Uncoated 20 32.68 12.68 71%

France Uncoated 20 39.23 19.23 71%

Germany Uncoated 20 42.48 22.48 71%

SD 240 (1/2 in.) 44.45 78.6 34.15 77%

Uncoated 1/2 in. 21 37.17 16.17 77%

England Uncoated 21 39.3 18.3 77%

France Uncoated 21 47.16 26.16 77%

Germany Uncoated 21 51.09 30.09 77%

Financial AnalysisFinancial Analysis

1. Increase annual sales and net earnings of AirCap by 30% for the next two years.

2. Increase awareness of AirCap as a packaging option.

AirCap Market Segment:AirCap Market Segment:

Small to large scale businesses located in the US, UK, Germany or France, that sell products which require packaging after manufacture.

Marketing Objectives:Marketing Objectives:

Direct Competitors

US Astro Packaging of Hawthorne

GAFCEL

Europe Sansetsu (Germany & UK)

Two major competitors entered

　 the market in France

Paper Based

Foams

Indirect Competitors

Flexible Wrap SegmentFlexible Wrap Segment

AirCap Competing Dimensions:AirCap Competing Dimensions:

1. Price

2. Value

3. Customization

Price:Price:

Thickness/ Height

Paper-Based

Foams Astro uncoated

GAFCEL uncoated

AirCap uncoated

AirCap Coated

3/16 $27.70 $52.00 $47.00 $42.84 $39.53 $67.56

4/16 – 6/16

$50.60 $109.72 $54.50 -- $41.10 $78.42

1/2 $65.00 -- $65.75 $57.07 $55.35 $94.32

Note: Prices for AirCap are adjusted with a 20% distributor mark-up.

Price (cont):Price (cont):

A Two-Pronged Strategy Is NeededA Two-Pronged Strategy Is Needed

Avoid “Price War” with entrenched competitors

Tailor strategy to fit each particular region

Any price advantages had by lowering prices are temporary

Steps must be taken to boost demand

Allows us to use uncoated bubbles to penetrate Protective Wrap and Void Fill markets further in the US

Helps penetrate European markets where there is more price sensitivity

Captures market share from Air Bubble manufacturing competitors

Price (cont):Price (cont):

Our Initial Pricing StrategyOur Initial Pricing Strategy

Differentiate coated and uncoated AirCap bubble uses.

Uncoated: Packaging of less fragile products geared towards smaller businesses.

Ex: Wood items, plastic goods, smaller products, etc.

Coated: Packaging for fragile items geared towards bigger businesses.

Ex: Glass, pharmaceutical bottles, computer components, clocks, larger items, etc.

Value:Value:

We have the specific wrap to meet your specifications

6 Grades Coated (Simplified):

A-100, SB-110, SC-120, ST-120, SD-120, SD-240

Potential of 3.7% loss in sales

6 Grades Uncoated:

A-100, SB-110, SC-120, ST-120, SD-120, SD-240

Customization:Customization:

Use existing sales network to target large business orders.

Focus on value and quality

Emphasize Coated AirCap

Use direct mail and trade shows to target smaller businesses and refer to distributors

Maintain efficient distribution network

Sales Strategy in U.S./EnglandSales Strategy in U.S./England

Change sales strategy to focus more on penetration and away from anti-uncoated

Increase sales force to 77 in the US

Maintain current time allocation (Instapak more growth potential)

Used to accommodate 30% sales increase (Avg. sales person = $600,000 in AirCap sales)

Sales StrategySales Strategy in U.S./England (cont.)

Increase sales force within Germany and France

Use one sales person for every $600,000 of expected or hopeful sales

Target large businesses focusing on Price of uncoated AirCap

Establish distribution network equivalent to sucessful models seen in US and England

Use direct mail and trade shows to target smaller businesses and refer to distributors

Sales StrategySales Strategy in Germany/France:

1. Increase annual sales and net earnings of AirCap by 30% for the next two years.

2. Increase awareness of AirCap as a packaging option.

AirCap Market Segment: AirCap Market Segment:

Small to large scale businesses located in the US, UK, Germany or France, that sell products which require packaging after manufacture.

Marketing Objectives:Marketing Objectives:

Outlook for the FutureOutlook for the Future

Further differentiating Aircap uncoated and coated bubbles by introducing colored bubbles

Renaming both uncoated and coated bubbles for further differentiation and eliminate negative connotations on uncoated bubbles

And, that’s a WRAP!And, that’s a WRAP!

Questions　&　AnswersQuestions　&　Answers